The Music Industry Bands Together to Finally Get Paid Online

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The Music Industry Bands Together to Finally Get Paid Online

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Last fall, a group of music industry heavyweights gathered in New York City to do something they’d mostly failed to do up to that point: work together. Representatives from major labels like Universal, Sony, and Warner sat next to technologists from companies like Spotify, YouTube, and Ideo and discussed the collective issues threatening their industry.

And there were many. For decades, major labels have watched record sales nose dive. Meanwhile, streaming services are growing in popularity but drowning in lawsuits. In 1998, the industry reported revenue of $13.8 billion; in 2016 it had dipped to $7.65 billion—and that was considered a good year. “It’s a really fragmented industry,” says Dan Harple, founder of Context Labs and one of the organizers of the meeting. The participants of that confab would later form a group called the Open Music Initiative.

The OMI got started in the winter of 2015, when Harple began working with Berklee's vice president of innovation and strategy, Panos A. Panay, Michael Hendrix of the design consultancy Ideo, and a handful of others at the school's Institute For Creative Entrepreneurship to establish a working group with sole purpose of figuring out how to ensure the music industry has a more sustainable future. Over the years, Harple's witnessed the power of technology change industries for the better; he’s also seen it wreak havoc on those that aren’t prepared.

The music industry, he says, falls squarely into the latter category. After decades of building distribution channels around record contracts and sales, the micro-transactional nature of the internet has, in some ways, diluted the industry. “I like to make a joke that it’s akin to a FedEx guy who shows up and gets 80 percent of your product price," Harple says. "To me, that’s in some ways what the App Store does and iTunes does and streaming services do.”

Those might sound like fighting words, but Harple isn't against digital music. A trustee of the Berklee College of Music, he helped create internet standards like the Real Time Streaming Protocol, which powers the technology that lets you pause, play, fast forward, and rewind on applications like YouTube and QuickTime. And when it comes down to it, he says, everyone—from startups to legacy labels to publishing houses—faces the same underlying issue. “Pretty early on it was obvious that there's an information gap in the industry,” says Erik Beijnoff, a product developer at Spotify and a member of the OMI.

That "information gap" refers to the data around who helped create a song. Publishers might keep track of who wrote the underlying composition of a song, or the session drummer on a recording, but that information doesn't always show up in a digital file's metadata. This disconnect between the person who composed a song, the person who recorded it, and the subsequent plays, has led to problems like writers and artists not getting paid for their work, and publishers suing streaming companies as they struggle to identify who is owed royalties. “It’s a simple question of attribution,” says Panay. “And payments follow attribution.”

Over the last year, members of the OMI—almost 200 organizations in total—have worked to develop just that. As a first step, they’ve created an API that companies can voluntarily build into their systems to help identify key data points like the names of musicians and composers, plus how many times and where tracks are played. This information is then stored on a decentralized database using blockchain technology—which means no one owns the information, but everyone can access it.

Think of it as a standardized set of liner notes. Keeping track of this metadata means artists and platforms can leverage it various ways without fear of violating rights. “What this API is allowing is real time access to information,” says Hendrix, a partner at IDEO who helped organize and develop the methodology behind the OMI. “That doesn’t exist today; it’s just too siloed.”

Though the API is still in beta, members say it's a solid starting point for an industry that rarely shares information openly. The ripple effects go beyond money, too. Panay points to all the apps built on Twitter's API and says the flow of data within the music industry could encourage entrepreneurs to start new companies, developers to build new experiences, and musicians to get more creative with how they sample and produce music.

“You can envision a world where any sound that's ever been created—any guitar lick, any drum loop, any synth line, any vocal—is accounted for,” Panay says. “If you have attribution to underlying contributors, you can imagine an explosion of creativity.”

9/9/2017: This story has been updated to include more detail about the formation of the OMI